Republican Brown wins in Massachusetts Senate race

Victory complicates passage of White House-backed health reform

WASHINGTON (MarketWatch) -- In a stunning victory that complicates President Barack Obama's proposed overhaul of the U.S. health-care system, Republican Scott Brown won Tuesday's special Senate election in Massachusetts, defeating the state's Attorney-General Martha Coakley to win the seat held by liberal icon Edward Kennedy for nearly 50 years.

The win by Brown, a previously obscure state senator, ends the Democrats' 60-seat supermajority in the Senate and spells trouble for easy passage of a health-care bill, Obama's top domestic priority.

The Associated Press projected Brown as the winner nearly an hour and a half after polling stations closed at 8 p.m. Eastern time.

Obama campaigned for Coakley in Massachusetts on Sunday, underscoring the White House's intense interest in the race for the seat long held by Kennedy.

In a victory speech, Brown said the seat belongs to no one but the state's voters.

"This is the people's seat," Brown said to a cheering crowd.

White House press secretary Robert Gibbs said in a statement that Obama spoke to both candidates and that Obama congratulated Brown on his victory and "a well-run campaign."

"The president told Sen. Brown that he looks forward to working with him on the urgent economic challenges facing Massachusetts families and struggling families across our nation," Gibbs said.

Brown had pulled ahead of Coakley in polls in the days leading up to the vote, setting Democrats' nerves on edge and forcing leaders in Obama's party to come up with alternative ways to push the health bill through Congress. A party needs 60 Senate seats to overcome filibusters and thus easily pass legislation.

Speaking to supporters Tuesday night, Coakley said she congratulated Brown.

Scenarios

Senate Majority Leader Harry Reid said Democrats plan to move "full speed ahead" with their agenda, in spite of the results on Tuesday.

"While Senator-elect Brown's victory changes the political math in the Senate, we remain committed to strengthening our economy, creating good paying jobs and ensuring all Americans can access affordable health care," Reid said in a statement Tuesday night.

Brown will be seated after the "proper paperwork" is received, Reid said.

Congress could still pass the health-care bill and send it to President Obama. The House could simply approve the language of the bill that was approved 60 to 39 in the Senate, thus negating the need to have another vote in the Senate, where Brown -- who publicly vowed to block the bill -- would wield the decisive vote. Many House liberals, however, believe their version of the bill is superior.

On Tuesday, House Majority Leader Steny Hoyer said that the Senate's health-care bill would be better than none at all.

"The Senate bill clearly is better than nothing," he told reporters. "I will make that point."

Democrats could also attempt to pass the bill through a special process known as reconciliation that prohibits filibusters and only requires but a simple majority in the Senate.

There is even some talk of changing the filibuster rules.

Both the White House and labor unions poured money and political capital into the Massachusetts race, hoping to buoy Coakley's chances and hang on to the Democrats' power in the upper chamber.

The Service Employees International Union, meanwhile, put 300 volunteers into the field and spent $685,000 on a TV ad attacking Brown, according to The Wall Street Journal.

The special election to replace the late Ted Kennedy came as Obama marked his first year in office. It also came as the American public remains skeptical of the president's proposed health-care overhaul. A new Washington Post-ABC News poll found that 44% of Americans support the proposed changes to the health-care system, but 51% oppose them.

Pollsters believe that Democrats are in danger of losing at least one Senate seat in November's midterm congressional elections, as well as several more seats in the House.

Financial overhaul

Brown's victory could also have an impact on proposed financial legislation. Brown has criticized the Obama administration's so-called financial-crisis responsibility fee, which would be a charge on big banks with $50 billion or more in capital.

The fee, which would need congressional approval, would be used to cover the remaining costs of the $700 billion bank-bailout package as well as help reduce the deficit. Brown argues that the tax would be passed onto consumers in the form of higher fees.

"If Brown wins, we think one of the interpretations will be that opposition to the bank tax is not politically fatal," Keefe, Bruyette & Woods analyst Brian Gardner said ahead of Brown's victory.

Brown's win could also put additional pressure on Senate Banking Committee Chairman Christopher Dodd, D-Conn., to compromise with Republicans and produce a bipartisan piece of legislation.

Dodd is working with Sen. Richard Shelby, R-Ala., the panel's ranking member, to release bipartisan legislation on bank reform. The two senators are debating whether to include an independent Consumer Financial Protection Agency to oversee mortgage and credit-card products.

Dodd would like to create such an agency, but he may be open to a compromise on it.

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